DEFINITION
A self help group is a group of 10-20 women or men, mostly women of a village, who make small savings over a period of time. The members of the group mutually contribute to a pool of resources and then lending can began from that fund. Bookkeeping and peer pressure ensures that the money is used properly and is timely repaid by the members.
NEED
- For making poor people self-reliant
- Availability of micro-credit and funds
- For upgrading their standard of living
- For providing self employment
- For emergency situations
STRUCTURE
- 10-20 members
- Generally, all members belong to Below Poverty Line(BPL)
- Maximum 30% in a group may be marginally Above Poverty Line(APL)
- Flat interest rates
- Only one member will be allowed per family
- A person will be strictly a member of one group only
- Free exchange of views done, like in a democracy
STAGES OF SHG
- Formation of group
- Pooling of funds
- Getting self-employed for becoming financially strong
CHARACTERISTICS
- It is a self governed body
- A code of conduct is followed
- It is linked with a bank for lending small amounts of loans
- No need of collateral
- Everyone in the group get self-employed through the financial assistance given.
- Withdrawal of money can also be gone in any emergency like in a disaster or a major health problem
- May or may not be promoted by government institutions
- Contributes to the financial stability of the group
- Helps those who don’t have a bank account
- Also help in members becoming an entrepreneur and in community development
ADVANTAGES
- Provides social and financial support
- Helps women develop a sense of leadership
- Helps invoke confidence and self confidence
- An individual feels strong along with the other members of the group i.e strength in numbers
- Empowerment of poor rural women
- To incorporate decision making among women
- To inculcate the habit of banking
- For development of women as they take up social responsibility
- Reduces dependence on informal lenders
- To inculcate habit of savings
NABARD- SELF HELP GROUP BANK LINKAGE PROGRAM
- Once a base fund or capital is created by a SHG and it also has a good track record of payments, the SHG is allowed to borrow from banks.
- Hence, formal financial services are granted to the members
- This further escalates entrepreneurial opportunities
LIMITATIONS
- Lack of training support
- Lack of support to stabilize the enterprise
- Group discussions may upset some members
- Less than ideal average loan size
- Limited funds
- Lack of proper time given to various group meetings
- NPAs of SHGs with banks
- Hence, SHGs are important for garnering economic and social support for people living in villages. Such groups prove to be vital for the less privileged in our country and help in providing strength and hope to them.
